The Sovereignty of Debt in Britain since the ‘Glorious Revolution’

Since December 2023 the head of King Charles III has appeared on the coins in British pockets. The image belongs to a story about England, and later Great Britain, in which a monarchy became a democracy through gradual reform, so that an elected Prime Minister now exercises the Monarch’s sovereignty while money issues from the Crown. The story is false.

In 1533 Henry VIII’s ‘Act in Restraint of Appeals’ declared that ‘this realm of England is an empire’, subject to no foreign power, and in the following decade the Crown recovered from Rome its jurisdiction over the English Church, and recovered from the monasteries, many of which were governed from France, roughly a quarter of the land of England, and associated rents. E. M. Burlingame rightly calls the Tudors English nationalists, who ended the claims foreign powers had made on England since the Conquest of 1066, after which Norman lords gave English estates to French abbeys [1]. The belief that the Norman Conquest laid a foreign yoke on the English is traced by Christopher Hill to the English Revolution, 1640–60 [2].

The Dutch invasion of England in 1688 undid the Tudor recovery of sovereignty from the Continent. A foreign prince took the English throne by force, and in 1694 the City of London, with his assent, founded the Bank of England. Venice created a new central bank model in 1619, when it founded the Banco del Giro to pay the Republic’s creditors, so that its deposits, which circulated as money, were claims on the state’s debts [3]. From 1694 the debts England’s monarchs and governments owed to the Bank’s creditors, most of them incurred in war, became the supreme sovereign in the land, in the sense that neither Crown nor Parliament could set them aside. Under a Dutch King, Parliament bound itself to raise taxes to pay interest to Parliament’s and the Crown’s creditors in the City of London, and no change of monarch or government since has released the nation from that obligation. But in a powerful example of propaganda, the invasion and the debt-based money system that followed it were called a ‘glorious revolution’.

On 30 June 1688 seven men signed an invitation to a foreign prince, William of Orange, to invade England: the Earls of Danby, Devonshire and Shrewsbury, Lord Lumley, Edward Russell, Henry Sydney and Henry Compton, Bishop of London. Compton’s diocese included the City of London, whose merchants and financiers had opposed the Stuarts for half a century. In the 1640s the City’s merchants in the American trades led it into financing Parliament’s war against Charles I [4]. In 1672 Charles II, short of money for his war against the Dutch, stopped repaying the £1.2 million that the goldsmith bankers of Lombard Street had lent him, and ruined Edward Backwell and Robert Vyner along with their depositors [5]. When the City’s Whig sheriffs and juries shielded the Earl of Shaftesbury and his allies in their campaign to exclude James from the succession, Charles took away the City’s charter in 1683 and placed its government under royal control [6].

The cover story for the invasion was that Charles II’s successor, his Catholic brother James II, meant to reverse the English Reformation, and hence the Church of England gave the invasion its legitimacy. Bishop Compton, whom James’s Ecclesiastical Commission had suspended in 1686, was the only cleric among the signatories, and the invitation went out on the day a London jury acquitted seven bishops whom James had prosecuted for refusing to have his declaration of toleration for Catholics and Dissenters read from their pulpits. In November, when James’s Protestant daughter Princess Anne abandoned her father and joined the rebels, Compton rode in arms at the head of her escort to Nottingham.

In April 1689 Compton crowned William and Mary as joint monarchs in Westminster Abbey, because Archbishop William Sancroft refused to swear allegiance to them; Sancroft and some 400 clergy who would not recognise William as king later lost their posts. William’s chaplain, Gilbert Burnet, and his court preachers presented the invasion as an act of God and the beginning of a ‘godly reformation’ of England [7]. The date of the landing supported the story. The Observance of 5th November Act of 1606 already required every parish to give thanks each year for the discovery of the Gunpowder Plot, and the revised service added thanks for William’s arrival, so that for 170 years the congregations of England celebrated a Dutch conquest as God’s rescue of Protestant England [8].

William landed at Torbay on 5 November with a fleet of more than 400 ships. James’s army fell apart at Salisbury after John Churchill deserted to the invader, and in the one real battle, at Reading on 9 December, Dutch dragoons routed James’s Irish troops. Francisco Lopes Suasso, a Sephardic financier of Amsterdam, had lent William two million guilders before he sailed, and once James had fled to France the City of London lent William the money to repay his Dutch loan and pay his army. In February 1689 a Convention, called on the advice of an assembly that included the Lord Mayor and aldermen of London, gave the throne to William and Mary [9].

William subsequently took England into war with France, whence James had fled, in May 1689, and by 1694 he needed more money to fund the war. The Scottish promoter William Paterson and the City merchant Michael Godfrey put forward a scheme on behalf of a group of London merchants, who would lend the Crown £1,200,000 at 8% interest in return for incorporation as a bank. Charles Montagu, a Lord of the Treasury, wrote the scheme into a bill for new taxes and duties, to which William gave royal assent in April 1694 before leaving to fight in Flanders [10]. The Act granted the Crown duties ‘upon Tunnage of Shipps and Vessells and upon Beere Ale and other Liquors’, from which it would pay ‘Recompenses and Advantages’ to those who funded ‘the carrying on the Warr against France’. It also forbade the Bank to lend to the Crown without Parliament’s consent, which bound the creditors and the legislature to each other [11]. Subscription books opened in Mercers’ Hall on Cheapside on 21 June and £1.2 million was raised within twelve days. On 27 July a royal charter incorporated the subscribers as the Governor and Company of the Bank of England, with the right to issue notes against the King’s war debts [10]. David Graeber observed in Debt: The First 5,000 Years that ‘(T)o this day, this loan has never been paid back. It cannot be. If it ever were, the entire monetary system of Great Britain would cease to exist’ [12, p. 49].

In 1694 the power to create money in England passed from the Crown to its creditors. Coins, the only money the Royal Mint still issues under the Crown’s authority, now make up a fraction of 1% of the money Britons hold, and banknotes are liabilities of the Bank of England. Economists at the Bank acknowledged in 2014 that 97% of the money held by the public consists of bank deposits, which commercial banks create when they make loans [13, p. 5; 14; 15]. The pound is backed neither by the land and water of the realm nor by the authority of the Crown, and exists almost entirely as interest-bearing debt. The King’s head on the coin hides a constitutional fact: sovereignty in Britain belongs to the holders of its debt, and the extension of the vote to every adult has not displaced them.

The Scots entered the arrangement through the Treaty of Union in 1707. Scotland took on a share of England’s national debt, and England paid in return an ‘Equivalent’ of £398,085 and 10 shillings, much of which reimbursed the investors ruined by the Darien venture in Panama. The nobles and merchants who promoted the case for the Union recovered their losses, and Scottish taxpayers took up the service of England’s war debts [16]. In 1752 David Hume, watching the debt mount, warned that ‘either the nation must destroy public credit, or public credit will destroy the nation’ [17].

In March 1885 James Allanson Picton, a Congregational minister and Radical Liberal MP for Leicester, published six lectures under the title The Conflict of Oligarchy and Democracy. The wars financed by the national debt, he wrote, had ‘served admirably the interests of certain limited classes’ while ‘wages sank, and provisions rose to famine prices’ [18, p. 17], and had left a debt ‘which now costs us twenty-eight millions a year’ [18, p. 36]. The Third Reform Act had just given the vote to some 60% of adult men, and Picton refused to call the result democracy: ‘If, after a thousand years of political evolution, we still grope in vain after the ideal of a commonwealth in which each is for all and all for each, it is this oligarchic cowardice and not the British crown that hinders us’ [18, p. 5]. American sociologist Ronald Glassman describes Victorian Britain as ‘a legally mandated oligarchy’ and argues that oligarchy ’emerges from a capitalist economy, along with democracy’, and outlives the reforms that complete the franchise [19, p. 41].

Universal suffrage arrived in Britain in 1928, and Jacques Ellul later explained in Propaganda: The Formation of Men’s Attitudes why it changed so little. Parties cannot pay from their members’ subscriptions for the propaganda that mass elections demand, so they turn to financiers ‘and thus indenture themselves to a financial oligarchy’ [20, p. 220]. The cost narrows the field to a few parties with similar programmes and shuts out new ideas [20, p. 219]. Ellul called the sovereignty of the people ‘that fiction, that abstraction’, and judged that it had harmed ‘democracy and the power of the people’ [20, p. 223], because propaganda turns democracy from a practice of deliberation into an object of belief, and ‘to make a myth of democracy is to present the opposite of democracy’ [20, p. 244].

Wolfgang Streeck of the Max Planck Institute in Cologne identifies the fiscal form of this myth. The state answers to a Staatsvolk of citizens who vote every few years and to a Marktvolk of creditors who vote every day through the interest they demand, and when the two disagree, governments obey the creditors [21]. Elizabeth Truss learned this to her cost in 2022, when her government announced modest tax cuts, the City sold gilts, precipitating a pension fund crisis, and Truss resigned after just seven weeks as Prime Minister. The English, and now the Scots, still live under the debt-based money system created in 1694, and its beneficiaries remain the bankers, financiers and guild merchants of the City of London. In 2025–26 the Treasury paid £109.3 billion in debt interest, more than £1 in every £12 it spent [22]. As Marc Chesney of the University of Zurich observes, ‘regardless of electoral results, one single policy prevails, that of the financial oligarchy’ [23, p. 12].

The Water Act of 1989 shows how the City continues to draw dues from the British people. Margaret Thatcher’s government wrote off the debts of the ten regional water authorities and sold them unencumbered to private companies, which then borrowed billions of pounds against future water bills to pay dividends to their shareholders. Customers cannot change their water supplier, so their bills form a revenue stream as dependable as the beer duties of 1694. Allen and Pryke traced how the Macquarie Group of Sydney, which led the consortium that bought Thames Water in 2006, securitised that stream, so that the gains of refinancing flowed ‘more towards investors than customers’ [24, p. 419]. Under Macquarie’s ownership, Thames Water’s debt grew to £10.7 billion while it paid £2.5 billion in dividends to its shareholders [25]. Thames Water borrowed against its customers’ future bills to pay its shareholders. Across the privatised water sector in England, David Hall and his colleagues at the University of Greenwich counted more than £83 billion paid out in dividends since 1989 and net debt of £69.5 billion, borrowed mainly to fund them [26]. On 18 September 2026 the House of Commons Environment, Food and Rural Affairs Committee urged ministers to reject a takeover of Thames Water by more than 100 creditors holding some £17 billion of its debt, who had asked for relief from fines and permission to raise bills; the committee chair said they did not have ‘the interests of the public, the company or the environment at heart’ [27].

The Electricity Act of 1989 applied the same model to electricity, and this time included Scotland. In 2010 a consortium led by CK Infrastructure of Hong Kong bought the networks serving London, the South East and the East of England for £5.8 billion; it took £4.4 billion in distributions from 8.5 million customers, and in February 2026 agreed to sell them to the French group Engie for £10.5 billion [28]. In 2017 Gillian Guy, chief executive of Citizens Advice, reported that network companies stood to make £7.5 billion of unjustified profit over eight years, for which ‘it is consumers who have to pay’ [29]. Brett Christophers of Uppsala University calls this rentier capitalism: profit drawn from control of scarce assets [30]. Labour and Conservative governments used the same model to build schools and hospitals under the Private Finance Initiative from 1992 until 2018. Many of the buildings were poorly constructed and constantly in need of repair, yet local authorities and health trusts remain legally bound to rent them from the companies that own them. In 2018 the National Audit Office found more than 700 contracts with future charges of £199 billion, and no data that could show any benefit to the public [31].

The Crown and successive governments have licensed the theft by City financiers of the national currency, the electricity network, schools and hospitals, and even the rain that falls on the land, and British households now carry record debts. Energy UK reported that households owed £6 billion in energy debt and arrears at the end of June 2026 [32]. In September 2025 Citizens Advice found that almost one water customer in five had struggled to pay; that 13% had paid with a credit card, an overdraft or a buy-now-pay-later loan; and that 35–40% of households were rationing water and cutting back on food and heating [33]. The Office for National Statistics counted 12.7 million households in Great Britain with debts other than mortgages and 9.2 million with mortgages, out of some 25 million [34]. Older homeowners borrowed £2.57 billion against their houses through equity release in 2025 [35]. Since 1694 Britain has led the world in turning a people of yeoman farmers, shopkeepers and workshop owners into ‘the indebted man’ of Maurizio Lazzarato’s description, whose future earnings are claimed before he earns them [36].

The seat of Britain’s debt sovereignty is the Square Mile of the City of London. Its Corporation, older than Parliament, keeps a business vote in which companies outnumber residents, and its Remembrancer has a reserved seat in the House of Commons. The City has its own police force, and steel barriers against vehicles now mark most of its borders with the rest of London. Nicholas Shaxson describes the City as the hub of a vast offshore network of tax havens through which more than a third of the world’s wealth still flows, including much of the wealth that companies such as Amazon, Apple, Boots and Google make in Britain, since they do huge business there but file their taxes in low-tax jurisdictions such as Ireland, Luxembourg and Monaco [37].

Every November, the month of the Dutch invasion, the City displays its sovereignty over the Crown, the Government and the peoples of Britain. A new Lord Mayor processes through the Square Mile behind wicker figures of Gog and Magog as guardians of the Guildhall, modelled after the giant Gogmagog of Geoffrey of Monmouth’s legend of Albion [38]. The Bible gives these names to the nations Satan gathers for the last battle against ‘the camp of the saints’ (Revelation 20:8–9), and it is fitting that a City corporation devoted to the accumulation of Mammon adopted these evil idols as its guardians. The annual procession halts at St Paul’s Cathedral for the Dean’s blessing, and the alliance Compton built between the See of London and the City endures. When Occupy London camped on the cathedral steps in October 2011, the Cathedral Chapter moved with the Corporation of London to evict the protesters, and Canon Giles Fraser resigned rather than see them removed by force.

I have spent more time in England since 2024, and I see in the faces of the English people how harried and submissive they have become under charges for energy, housing, parking and water, and under taxes heavier than ever in their history. But the Crown and Government succeed, as the Dutch William also did, in persuading them that the interest the government pays to the holders of its debt is the first charge on the public purse, so that it has no choice but to increase an already heavy burden of duties and taxes on ordinary men and women to pay it. The same government, with its compliant media and ‘loyal opposition’, insists that the nation must add to duties, taxes and war debts begun by a Dutch king for yet another foreign war, against Russia. If you are in England on 5 November you will see a propagandistic ritual of bonfires, effigies and fireworks. Most of those who attend have no idea that they are celebrating less the foiling of the Gunpowder Plot than the sealing of their serfdom to the Bank of England and the City of London by a foreign invader. His name was taken by the next heir to the throne, who will be no more a sovereign than his predecessors or his subjects.

References

1. E. M. Burlingame, ‘The Genesis Event: 1688 as the Hostile Takeover of the English People Through State Capture’, E.M.’s Newsletter, 1 March 2026. https://emburlingame.substack.com/p/the-genesis-event
2. Christopher Hill, ‘The Norman Yoke’, in Puritanism and Revolution: Studies in Interpretation of the English Revolution of the 17th Century (London: Secker and Warburg, 1958), 50–122.
3. William Roberds and François R. Velde, ‘Early Public Banks’, Federal Reserve Bank of Chicago Working Paper 2014-03 (2014). https://www.chicagofed.org/~/media/publications/working-papers/2014/wp2014-03-pdf.pdf
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21. Wolfgang Streeck, Buying Time: The Delayed Crisis of Democratic Capitalism, trans. Patrick Camiller (London: Verso, 2014).
22. ‘Andy Burnham is on course to rack up the second highest debt interest bill on record’, City AM, 6 August 2026. https://www.cityam.com/?p=2448739
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25. Kate Bayliss, ‘How Thames Water came to be flooded with debt, and what it means for taxpayers’, The Conversation (2023). https://theconversation.com/how-thames-water-came-to-be-flooded-with-debt-and-what-it-means-for-taxpayers-208788
26. Public Services International Research Unit, The Context and Consequences of Ofwat’s Price Plan for 2025–30 (London: University of Greenwich, 2024).
27. ‘Thames Water’s creditor rescue deal should be ditched, group of MPs says’, AJ Bell, 18 September 2026. https://www.ajbell.co.uk/news/articles/thames-waters-creditor-rescue-deal-should-be-ditched-group-mps
28. ‘CK Group to divest entire UK Power Networks stake for £10.55 billion’, Tiger Brokers, 27 February 2026. https://www-web.itiger.com/news/1111856609
29. Citizens Advice, ‘Energy networks making £7.5bn in unjustified profit over 8 years’, 12 July 2017. https://www.citizensadvice.org.uk/about-us/media-centre/press-releases/energy-networks-making-75bn-in-unjustified-profit-over-8-years-citizens-advice-finds/
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33. Citizens Advice, ‘One in five struggled to pay water bill in last year’, 12 September 2025. https://www.citizensadvice.org.uk/about-us/media-centre/press-releases/one-in-five-struggled-to-pay-water-bill-in-last-year/
34. Office for National Statistics, Household Debt in Great Britain: April 2016 to March 2018 (Newport: ONS, 2019). https://www.ons.gov.uk/peoplepopulationandcommunity/personalandhouseholdfinances/incomeandwealth/bulletins/householddebtingreatbritain/latest
35. Equity Release Council, ‘Council publishes Q4 lending figures 2025’ (2026). https://www.equityreleasecouncil.com/news/council-publishes-q4-lending-figures-2025/
36. Maurizio Lazzarato, The Making of the Indebted Man: An Essay on the Neoliberal Condition, trans. Joshua David Jordan (Los Angeles: Semiotext(e), 2012).
37. Nicholas Shaxson, Treasure Islands: Tax Havens and the Men Who Stole the World (London: Bodley Head, 2011).
38. Geoffrey of Monmouth, The History of the Kings of Britain, trans. Lewis Thorpe (Harmondsworth: Penguin, 1966).

(Featured Image: “Lord Mayor’s Show” by Donnchadh H licensed under CC 2.0.)